The Telegraph runs a feature on what peer-to-peer (P2P) lending can do for small and medium-sized enterprises (SMEs). We run a short extract below, and suggest that you look at the type of loan we've been doing for our SME borrowers from an early stage. The Mecmesin £1 million loan, back in 2014, was believed to be the largest-ever loan made without property backing. It has since had a faultless repayment record.
"When Tom Adams approached banks looking for a loan to buy the premises for his guesthouse in Cornwall, he was met with little encouragement.
"The chef, who launched the project alongside New York-based chef April Bloomfield, was unable to get a loan from a mainstream source. But the pair finally launched the business after getting their funding from a peer-to-peer lender.
"The loan was needed to purchase a 200-year-old £1.5m property, Coombeshead Farm, a Cornish farmhouse and former landowner's seat. The plan was to first turn it into a hotel, with Mr Adams cooking dinner using local Cornish produce for guests, and eventually expand into a restaurant.
"Both are experienced and acclaimed chefs. Michelin-starred Ms Bloomfield runs New York celebrity hotspot, The Spotted Pig, while Mr Adams runs London restaurant and bar, Pitt Cue. But neither had ever undertaken a project such as Coombeshead Farm, and the biggest challenge was how to finance the building purchase.
"'It was all new territory,' says Mr Adams. 'We tried to go down the textbook route, but it wasn't viable, mainly because of the commercial element. It wasn't just that we were looking for a house to live in; we needed to have a viable business too. And for a lot of banks, that wasn't a risk that they were prepared to take.'
"After eight months of searching, Mr Adams and Ms Bloomfield eventually obtained a loan to buy the building from peer-to-peer lender, Folk2Folk, which specialises in rural business projects local to the South West. The interest-only loan works like a mortgage and has a rate of 6.5pc, with repayments made monthly. It's secured against the property, so will be repaid if and when it is sold. The lender adopts a relatively cautious attitude and will only lend up to 60pc of the property's forced-sale value."
Our latest loan offering, from webuyanyhome.com, is A+ rated, and is property-backed – ie, it is secured against property. It is currently 55 per cent funded, with a gross indicative yield of 7.8 per cent.
Crowdfunding & Risk
To learn more about the basics of crowdfunding and peer-to-peer (P2P) business lending, visit our Knowledge Hub. There are also explanatory videos on site. Remember, when you loan capital, it is at risk. Please read the warnings and explanations on site before committing your capital.